In the energy market Monday, crude for August delivery debuted as the front-month contract by pushing higher, closing at $136.74/barrel, up $1.38. July reformulated gasoline rose 1.6 cents, to $3.4551/gallon.

Traders were unimpressed by the results of the oil summit in Jeddah over the weekend, at which the Saudis said they would raise daily production by 200,000 barrels in July, on top of the increase of 300,000 barrels a day announced in May.

Kevin Kerr, president of Kerr Trading International, summarized sentiment by saying that, “The meeting was little more than a slap in the face as to the U.S. and the rest of the world as 200,000 is next to nothing … The fact remains that we can simply no longer have an oil policy that forces us to go beg for supply.”

The Saudi commitment, said Anthony Sabino, a professor of law at St. John’s University, is “a general indication that OPEC realizes that prices are so high it will stanch the flow of petrodollars into their coffers, not to mention that a worldwide recession will depress demand for their only viable export.”

Why do prices remain elevated? “The market has so convinced itself that the spiral is never ending upwards, it won’t allow itself to level off — at least not yet,” Sabino said.

That doesn’t mean supply problems aren’t real, as the Nigerian situation demonstrates. Militants there have shut down facilities belonging to both Shell and Chevron in recent days, despite declaring a unilateral ceasefire, which goes into effect today.

And, as Goldseek.com warned: “Also troubling is that Saudi Arabia does not produce the light sweet crude needed for gasoline which comes from politically unstable areas like Nigeria. The sour crude produced by Saudi Arabia needs more refining which isn’t necessarily available or quickly solved due to the lengthy process of commissioning new plants. The prospect for more violence or even new wars in various parts of the world as well as the possibility for damaging hurricanes seem to be the most worrisome aspects for the market in the next few months.”

Source: Crude Rises Despite Saudi Supply Commitment - Nigerian Unrest Continues